Many registered persons are convinced that the FINRA arbitration process is loaded against them and they cannot get a fair shake. Fact is, ask enough public customers and their lawyers, and you will likely hear the same refrain. Every so often, however, the customer gets a little something and the stockbroker gets a little something and, hey, sometimes everyone wins, everyone loses, everyone is unhappy, and everyone is happy.
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in September 21, 2012, public customer Claimant Giusto asserted, among other causes of action, breaches of contract and fiduciary duty, and fraud in connection with alleged losses in unspecified stock investments. Claimant sought $133,000 in actual damages, attorneys' fees, costs, expenses, disgorgement of commissions, and interest. In the Matter of the Arbitration Between Thomas A. Giusto, Claimant vs. Edward Jones and Christina Jeanette Price, Respondents (FINRA Arbitration 12-03415, October 11, 2013).
Respondents generally denied the allegations, asserted various affirmative defenses, and requested the expungement of the matter from the Central Registration Depository records ("CRD") of Respondent Price.
On September 9, 2013, parties advised FINRA Dispute Resolution that the matter had settled but that the case should remain open to hear Respondent Price's request for expungement, which subsequently occurred without Claimant's opposition or participating.
The Panel recommended the expungement based upon its finding that:
[A]lthough the Claimant suffered a financial loss, the loss was caused by the market downturn and Claimant's sale of the securities at the bottom of the market rather than any action or inaction on the part of Respondent Price. The facts establish that Respondent Price advised the Claimant not to sell when the value of Claimant's securities fell. Claimant's loss would have been avoided if the Claimant heeded his advice.
Because there is no evidence suggesting that any of the investments suggested by Respondent Price were unsuitable. Claimant's allegation of unsuitability is clearly erroneous. The facts also establish that the registered person did not commit any investment-related sales practice violation. No evidence was introduced proving that Respondent Price's conduct was in any way negligent no less fraudulent or that Respondent Price had in any way violated her fiduciary duty to the Claimant.
Bill Singer's Comment
According to online FINRA documents, this case was settled by Respondent Edward Jones on September 13, 2013, in the amount of $32,500 (without contribution from Respondent Price) and was based upon allegations that:
CLAIMANT CLAIMS THAT HE AND HIS WIFE, AT THE RECOMMENDATION OF HIS FINANCIAL ADVISOR, INVESTED IN UNSUITABLE INVESTMENTS IN 2006. THE CLAIM FAILS TO IDENTIFY THE INVESTMENT(S) AT ISSUE. THE CLAIMANT FURTHER CLAIMS THAT RESPONDENT FAILED TO FOLLOW HIS INSTRUCTIONS IN 2008 TO REMOVE THEIR INVESTMENTS FROM THE STOCK MARKET IN 2008.